Is Kohl's Stock Mispriced After Its 64.3% 2025 Rally?

• Wondering if Kohl's is a sleeper value play or a value trap at this point in the retail cycle? This article is going to walk through what the numbers are really saying about the stock.
• After a sharp 31.4% jump over the last month and a strong 64.3% gain year to date, Kohl's recent pullback of 6.3% in the last week shows the market is still debating what it is really worth.
• Investor sentiment has been shifting as Kohl's continues to push its store refresh strategy, partnerships, and loyalty initiatives, all while navigating a tougher consumer backdrop. At the same time, ongoing discussions around asset efficiency, inventory management, and real estate value are keeping the stock on value investors' watchlists.
• On our framework, Kohl's scores a solid 5/6 valuation checks, which suggests the market may not be fully pricing in its underlying cash flows and assets. Next, we will walk through the key valuation approaches analysts use on Kohl's, and later circle back to a more holistic way of thinking about what the stock is truly worth.

Kohl's delivered 61.3% returns over the last year. See how this stacks up to the rest of the Multiline Retail industry.

Approach 1: Kohl's Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and discounting them back to today, using a required rate of return. For Kohl's, the model starts with last twelve month Free Cash Flow of about $772 million, then layers on analyst forecasts and longer term extrapolations.

Analysts currently expect Kohl's to generate around $818 million in Free Cash Flow by 2026, dipping to roughly $603 million in 2027, before recovering toward $769 million by 2028 and then growing modestly through 2035. Simply Wall St extends these projections beyond the formal analyst horizon using a 2 Stage Free Cash Flow to Equity approach, which tapers growth as the business matures.

When all those future cash flows are discounted back to today, the model arrives at an estimated intrinsic value of about $65.36 per share. That implies Kohl's trades at roughly a 64.7% discount to its DCF value, suggesting the market is heavily discounting its long term cash generating potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kohl's is undervalued by 64.7%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Kohl's.

Approach 2: Kohl's Price vs Earnings

For a profitable retailer like Kohl's, the Price to Earnings multiple is a practical way to gauge value because it links what investors pay directly to the profits the business is generating today. In general, faster growing and lower risk companies deserve higher PE ratios, while slower growth or more uncertainty usually means a lower, discounted multiple is appropriate.

Kohl's currently trades at about 13.26x earnings, which is well below the Multiline Retail industry average of roughly 19.81x and the broader peer average of around 21.58x. At first glance, that kind of discount can look like a clear bargain, but simple peer comparisons do not adjust for company specific traits like growth profile, profitability, or balance sheet risk.

Simply Wall St's Fair Ratio addresses this by estimating what a reasonable PE should be for Kohl's, given its earnings growth outlook, margins, risk factors, industry, and market cap. For Kohl's, that Fair Ratio is around 19.96x, materially higher than where the stock trades today. On this framework, the current 13.26x multiple suggests the market is still pricing Kohl's below what its fundamentals would typically warrant.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Kohl's Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Kohl's story with the numbers behind it, including fair value, and expectations for future revenue, earnings, and margins. A Narrative is your personalized storyline for the company that links what you believe about its strategy, competitive position, and risks to a concrete financial forecast and then to a fair value estimate. On Simply Wall St, Narratives are an easy, accessible tool inside the Community page, used by millions of investors to turn qualitative views into structured, comparable valuations. They help you compare your Narrative Fair Value with the live market price, and they automatically update when new information like earnings, guidance, or major news is released. For Kohl's, one investor Narrative might see fair value near $34 based on real estate and cash flow strength, while another might lean closer to $15.60 given tougher retail headwinds, and Narratives allow you to see, test, and refine which perspective fits your own expectations.

For Kohl's however we will make it really easy for you with previews of two leading Kohl's Narratives:

🐂 Kohl's Bull Case

Fair value: $34.00 per share

Implied undervaluation vs last close: 32.2%

Revenue growth assumption: 48.01%

• Argues Kohl's is trading far below even a conservative estimate of its real estate and hard asset value, with market cap under $1 billion against nearly $8 billion in property.
• Views bankruptcy risk as overstated, highlighting strong free cash flow, declining debt, and the flexibility of lease obligations compared with traditional debt.
• Sees current levels near $8.30 as a deep value entry point with long term potential toward book value around $34, and potential optionality from a buyout or privatization.

🐻 Kohl's Bear Case

Fair value: $15.61 per share

Implied overvaluation vs last close: 32.2%

Revenue growth assumption: -1.60%

• Highlights structural headwinds from declining store traffic, pressured middle income consumers, and slower digital adoption, which may cap revenue and comp growth.
• Flags ongoing margin pressure from higher promotions, wage inflation, and execution risks around omnichannel strategy despite cost cutting and inventory discipline.
• Aligns with an analyst consensus target of about $14.28, implying downside from the current price and suggesting that, even with some improvement, the stock already embeds optimistic expectations.

Do you think there's more to the story for Kohl's? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com